SEGMENT REPORTING UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS

Abstract

The given research aims at disclosing procedures for segment reporting under the International Financial Reporting Standard 8 «Operating Segments». The Law of Ukraine «On Accounting and Financial Reporting in Ukraine» strictly defines business entities obliged to apply international financial reporting standards when preparing financial reports and segment reports in particular. The author has applied primary methods of research. The method of analysis has enabled to indicate and analyse operating and reporting segments. The paper identifies criteria for reportable segments: separately reportable segment must cover at least 75 % of total revenue earned by sales to external customers. Synthesis is used to aggregate two and more operating segments into a single operating segment. The research focuses on considering procedures for disclosing information about profit and loss for each separately reportable segment. Required disclosures include information on revenue from external customers and from transactions within other customers, financial revenues and expenses, depreciation, significant revenues and expenses, income tax expense, and significant non-monetary items other than depreciation. The list of revenues and expenses analysed by an operational manager of a particular business entity is unique and depends on an implemented system of managerial accounting. The practical value refers to presenting procedures for segment reporting by a public joint-stock company with the purpose of disclosing a financial result, assets, and liabilities for the 2022 accounting period. The author has verified segment information by separating items, which build up profit, assets, and liabilities. The paper substantiates the necessity of applying professional judgment while classifying information as significant and non-significant one with the purpose of its further disclosure in a business entity’s financial reports, so far as International Financial Reporting Standard 8 «Operating Segments» is considered to be the only international standard that contains strict standards for significance. Other standards enable decision makers to identify qualitative criteria of significance for certain figures and their disclosure in financial reports of a business entity. The research results in preparing a table, which contains detailed segment information with reference to business activities of a public joint-stock company. A business entity has made a transfer from the overall operating profit by segments to the total operating profit in the process of cohering the indicators.